Will Becoming an Authorized User Help My Credit Score?

Becoming an authorized user can help establish your credit record, especially when you have little personal credit history. This allows you to access credit without the need to open a new account, and the primary cardholder’s financial discipline could be advantageous for you.

However, being an authorized user carries some significant considerations, and it’s not the sole method to develop or repair credit. Here are some tips to ensure that this is the right step for your circumstances.

What Is an Authorized User?

A permitted user is an individual who holds a supplementary position on a credit card account. These users have the leverage to procure items but are not ultimately answerable for settling the debt, a responsibility that falls on joint account holders or cosigners.

Such a permitted user can gain their own credit card and distinct account details; however, spending can be reviewed and payments made by the principal card owner. The decision to pay back the primary owner for any amounts credited to the card or to abstain from utilizing the card completely lies with the permitted user. An added advantage they have is the ability to benefit from the account’s longstanding record as well as its positive payment history.

How Does Being an Authorized User Help Credit?

If your credit history is minimal or nonexistent, becoming an authorized user provides an ideal headstart. When a trusted individual includes you as an authorized user on their credit card, a new account is reflected on your credit report.

Moreover, the features of the primary account significantly influence your credit scores. Joining an account with a long-standing history, impeccable payment records, and a low credit utilization ratio, i.e., a small proportion of the total credit available being employed, will be the most beneficial to you.

However, for these factors to be advantageous, the credit card issuer has to record authorized-user operations to credit bureaus, and your credit score needs to take into account this activity. Everyone has several credit scores, and some may not view authorized-user activities as indicative of your credibility, as compared to individual or joint account activities.

Therefore, if your aim is to recover from tainted credit or want a quick significant boost, considering opening your own account, like a secured credit card or a credit-builder loan could be a wise move. More about those alternatives will be discussed later.

What Are the Risks of Being an Authorized User?

While associating with a prudent credit user can boost your credit, aligning with an erratic cardholder can be damaging. If they miss payments or max out their credit, it may negatively impact your credit score. Some credit bureaus, like Experian, exclude negative payment histories from an authorized user’s credit profile. However, other bureaus might include them.

Before opting to become an authorized user, probe the primary account owner regarding any late payments history, the duration for which they’ve had the account, and the frequency of their credit limit usage exceeding 30%. Financial advisors generally recommend that individuals with excellent credit scores typically utilize less than this percentage regularly (and the elite scorers maintain it at under 10%). To ascertain that you’re on the right path, you could also request if the account owner would permit you to review their credit report.

How to Remove an Authorized User

The main account holder has the freedom to exclude a secondary user at their discretion by reaching out to the customer support team of the credit card provider. Some card issuers may also allow these modifications to be made through their online platforms. Furthermore, secondary users may have the right to withdraw themselves, the specifics of which are reliant on each credit card provider’s policies.

If you notice that you’ve been delisted as a secondary user but the card transactions are still evident on your credit report, you have the option to request a dispute with the card provider through the credit bureaus. The initiation of such disputes is often possible online and the progress can typically be tracked via email updates.

The Conclusion

In the appropriate situations, acquiring the status of an authorized user could provide you an entry into the credit universe without the necessity of setting up your personal account. Ensure the issuer of the credit card duly acknowledges your conduct and choose a reliable primary cardholder. However, for an enhanced benefit, couple—or substitute—the role of an authorized user with tactics to build credit that might prove to be more fruitful.